1. When can you access your super?
You can access your super if you:
- are over 65, or
- are retired and over your preservation age, or
- meet one of the early eligibility requirements
2. What is a preservation age?
Your preservation age is the earliest age at which you can access your super without meeting an early eligibility requirement.
Your preservation age depends on when you were born. Refer to the table below to determine your preservation age.
3. What does “retired” mean?
If you are over 60 years old, “retired” means that you are not working. For the purposes of accessing your super, you also qualify as “retired” if you change jobs after 60.
If you are over preservation age and under 60 years old, “retired” means that you are not working and you don’t intend to work again either on a full time or part time basis. Part time is defined as more than 10 hours a week. For the purposes of accessing your super, if you stop working and have no intention to return to the workforce, but ultimately do end up working again, your status as “retired” is unaffected.
4. I satisfy the requirements to access my super. What are my options?
- Do nothing. Just because you can access your super, doesn’t mean you have to yet.
- Access your super through a pension. There are two types of super pensions. See below for further details.
- Access your super without a pension. If you are over 65, you can access your super however you like. There are no restrictions. If you do access your super without setting up a pension however, the super fund pays tax on the income.
5. What is a pension and how does it work?
There are two types of pensions. Simple Account Based Pensions (SABP) and Transition to Retirement Pensions (TRIS/TRAP).
Both these pension types have different qualifying and benefit characteristics. Refer to the table below.
*Refer to the links at the bottom of this page for further information on these terms
See minimum annual pension payment information from the ATO here.
6. How do I start a pension?
Contact New Brighton Capital when you wish to start your pension. We will work out your commencement balance as well as the minimum and maximum (if applicable) withdrawal amounts available to you.
7. How are the minimum and maximum payments calculated?
The minimum and maximum (if applicable) payments for the next financial year are determine by the accountant when they complete the current financial year’s tax return
8. Is there a limit to the amount I can have in my pension?
Yes. There is for limit for SABPs. The limit is called the Transfer Balance Cap (TBC). As of July 1st 2021 the value of the TBC is $1.7 million.
There is no limit for a TRIS/TRAP.
9. What happens if I start a SABP but have more than $1.7 million in super?
Earnings from the fund that are not in the SABP are taxed at the normal accumulation rates.
10.When I begin a pension, do I need to set up another bank account or separate my assets?
No, you do not need to set up any other accounts. Nor do you need to separate the assets into those in the pension account and those remaining in accumulation. The accountants determine everything required by treating the pension as a percentage of the total fund.
11. My fund has multiple members. How will this affect my pension?
Having multiple members in a fund does not impact your ability to go on a pension. Again, you do not need to set up any other accounts or separate assets.
12. Can I top up my SABP?
If you have already reached the $1.7 million limit, then no. Once you set up the pension, the value of the pension is equal to original $1.7 million pension plus any earnings from the pension, minus the pension payments made. Even if the value of the pension falls below $1.7 million you cannot top it up because you have already allocated up to the limit.
If you set up the pension with less than $1.7 million then you can not add to the original pension, but you can set up another pension as long as the total amount allocated does not go over $1.7 million cap. For example: if you had previously set up a pension for $1.5 million, you can set up another pension at any time for up to $200,000.
13. What happens if I set up a TRIS and then qualify for SABP (by either retiring or reaching 65).
Your TRIS will change its status to a R-TRIS (the R stands for retirement phase). An R-TRIS has the same benefits as an SABP.
If you qualify by reaching 65 then no documentation is required. If you qualify by retiring you will need to sign a “Retirement declaration”.
14. Are there any costs associated with going on a pension?
If you set up a pension at any time other than the end of the financial year, then the accountants will need to prepare mid-year financial statements. Mid-year financials are provided at a cost of $880.
If your SABP had both pension and accumulation balances during the financial year, an actuarial certificate is required to determine the amount of the fund’s income that is tax free. New Brighton Capital provides the actuarial certificate for $220.
15. What are the early eligibility requirements?
You can access your super before retirement/preservation age if you meet one of the following early eligibility requirements:
- Severe financial hardship
- Terminal illness
- Temporary resident
- Less than $200.00 in your super
- Compassionate grounds
Information on early release of superannuation can be found here.
If you access your super for any of these reasons, it first needs to be approved by the ATO.
Please message us via your online portal if you are entering into pension phase with your SMSF and we will guide you through the process.
For more information on retirement and accessing your super please review the ATO website.